Discrete-continuous choice model

Sho Kuroda

Chapter 24 in Elgar Encyclopedia of Energy Economics, 2025, pp 90-91 from Edward Elgar Publishing

Abstract: The discrete-continuous choice model is a stylized framework for analyzing the ownership and utilization of durable goods within a unified microeconomic perspective. Specifically, it investigates the simultaneous decisions regarding the ownership (a discrete choice) and utilization (a continuous choice) of goods, exemplified by the purchase and mileage decisions made by automobile owners. For instance, gasoline tax policies are designed to curtail carbon emissions through two mechanisms that shift the demand for automobiles: decreasing the number of miles driven per owned vehicle (the intensive margin) and switching to more fuel-efficient vehicles (the extensive margin). Quantitative analysis of both ownership and utilization behavior is therefore crucial for the effective design and evaluation of energy and environmental policies. This entry describes the importance of the model in designing real-world energy and environmental policies, model formulation and estimation methods, and additional methodologies for policy evaluation.

Keywords: Automobile Demand; Carbon Emission; Extensive And Intensive Margin; Micro-Econometric Model; Policy Design; Policy Evaluation (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310364
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